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A sharp increase in the cost of transporting petroleum products into West Africa is driving up fuel import costs, latest market intelligence from S&P Global Commodity Insights has shown.
However, the report indicated that Nigeria has so far been largely insulated from the impact as the Dangote Petroleum Refinery continues to keep domestic prices below import parity.
According to the S&P Global Commodity Insight rates for cleaner petroleum products shipped from Northwest Europe to West Africa have climbed significantly, increasing the cost of imported fuel across the region.
S&P said freight rates rose from $29.70 per metric tonne at the end of June to $37.12 per metric tonne, representing an increase of about 25 per cent in just a few weeks as vessels repositioned to serve alternative markets.
The surge in shipping costs comes amid rising international gasoline prices and tighter global fuel supplies, creating additional pressure on importers supplying Nigeria and other West African markets.
Market participants told S&P that importers into Nigeria are finding it increasingly difficult to compete because the Dangote Petroleum Refinery has maintained stable coastal sales prices despite mounting global cost pressures.
One trader quoted by S&P said gasoline prices in Nigeria are effectively being “capped by Dangote prices,” preventing importers from passing the higher international and freight costs on to consumers.
Another trader noted that while gasoline meeting Ghanaian specifications is attracting higher premiums, Nigerian-specification cargoes remain constrained because Dangote has kept its prices unchanged.
“Lomé values have risen above Dangote sales prices, which has shut the arbitrage,” the trader said, indicating that importing gasoline into Nigeria has become commercially unattractive under prevailing market conditions.
Beyond higher freight charges, S&P said diesel markets have also tightened following reduced supplies of Russian Black Sea cargoes, pushing up prices for high-sulphur gasoil across West Africa and adding further pressure to import costs.
Despite these developments, Dangote Petroleum Refinery has continued to moderate domestic fuel prices.
Since the end of May, the refinery has reduced the ex-depot price of Premium Motor Spirit (PMS) by more than N200 per litre, Automotive Gas Oil (AGO) by N300 per litre, and Jet A1 aviation fuel by N520 per litre, even though much of the crude oil used for refining was purchased when international oil prices were considerably higher.
The refinery has maintained that its pricing reflects the actual cost of crude procurement under commercial supply contracts, rather than daily fluctuations in Brent crude prices, noting that crude is typically acquired weeks or months before processing.
Market analysts said the latest S&P assessment highlights how rising freight costs are becoming an increasingly important component of imported fuel prices, reinforcing the economic advantage of local refining.
According to them, had Nigeria remained heavily dependent on imported petroleum products, the combination of higher international gasoline prices, escalating freight rates and tightening global supplies would have translated into higher pump prices for consumers.
The report also underscores Dangote Refinery’s growing influence on petroleum pricing in West Africa, with traders increasingly treating its pricing as the regional benchmark.
Industry observers said the refinery’s ability to keep domestic prices competitive despite rising global freight and product costs demonstrates the strategic value of local refining in reducing exposure to external supply disruptions, conserving foreign exchange and enhancing energy security for Nigeria.
